Netflix still sucks on AT&T, and now AT&T plans to offer Netflix clone

AT&T partners with an investment firm to buy and launch streaming services.

AT&T and an investment group run by former Fox President Peter Chernin announced today that they have created a $500 million venture "to acquire, invest in and launch over-the-top (OTT) video services."

Further Reading

This venture "creates the opportunity for us to develop a compelling offering in the OTT space," AT&T Chief Strategy Officer John Stankey said in the announcement.

OTT services provide video programming over an Internet connection, one that may come across the same wires as a separate cable TV service. AT&T hasn't been a fan of OTT provider Netflix. It's still haggling with the company over how much money the video service should pay for a direct connection to the TV and Internet provider's network. Netflix was able to strike a deal with Comcast, improving video quality for Comcast subscribers; Netflix quality on AT&T has remained substandard.

AT&T's new venture is with the Chernin Group, which Peter Chernin founded in 2009. "This alliance positions AT&T and The Chernin Group to take advantage of the rapid growth of online video and OTT video services, with each party bringing significant and complementary strengths. The strategic goal of this initiative will be to invest in advertising and subscription VOD channels as well as streaming services," the companies said.

Chernin noted that "Consumers are increasingly viewing video content on their phones, tablets, computers, game consoles, and connected TVs on mobile and broadband networks. AT&T’s massive reach on those platforms across mobile and broadband and their commitment to the online video space make them the perfect fit for this venture with us.”

Verizon wants in on this action as well. It also created a video streaming service by partnering with Redbox and is also asking Netflix to pay for a direct connection to its network, even as Verizon users complain of poor Netflix performance. Netflix has tried to avoid making payments, despite giving in to Comcast, and has asked the FCC to issue net neutrality rules that "prevent ISPs from charging a toll for interconnection to services like Netflix, YouTube, or Skype."